However, this doesn’t mean they should be looking to buy inflation-linked bonds, he says. “Inflation-linked securities offer a sort of half-way house. If people are particularly negative about the bond market, they should hold cash.” However, the short-end of Italian government bonds are good value on a total return basis, he argues. The same goes for inflation-linked Treasuries on a medium-term basis, “as we move through what is likely to be a tightnening cycle by the Federal Reserve.”
Roberts also gives various ither suggestions as to which assets would do well in this environment. He is especially outspoken on the relative attractiveness of investment-grade corporate debt compared to government bonds. “Today, if you buy a portfolio of high-quality 10-year corporate bonds, you receive an income from these securities two to three times the underlying government bonds market,” he says.
Last but not least, he answers the question whether you should buy contingent convertibles increasingly issued by the big financial institutions.